Volkswagen's Herbert Diess to remain CEO, with less control

BERLIN – Volkswagen chief executive Herbert Diess secured further support from the automaker’s supervisory board on Thursday, but his re...

BERLIN – Volkswagen chief executive Herbert Diess secured further support from the automaker’s supervisory board on Thursday, but his responsibilities will be reduced as the company seeks to regain investor confidence lost in recent weeks over a dispute on his leadership style.

As part of a compromise deal with 63-year-old Diess, more authority will be vested in Ralf Brandstätter, 53, who took over the Volkswagen brand last year. Mr. Brandstätter will join the board of directors and start managing the company’s activities in China next summer. China is Volkswagen’s most important market outside of Europe, but the company has struggled to gain a foothold in the electric vehicle market there.

Mr Diess, however, will take on a new role as head of the company’s software unit, Cariad, which the automaker sees as critical to its future success and a key part of Volkswagen’s transformation process from a historic automaker to be a competitor in the increasingly computerized global vehicle market. The board also approved investments of € 52 billion, or around $ 59 billion, over the next five years to expand global electric mobility.

“We have taken important decisions and found the right answers to prepare Volkswagen for the future,” Chairman of the Board of Directors Hans Dieter Pötsch told reporters afterwards. He also apologized to shareholders for the uncertainty caused by the latest wave of speculation about the company’s leadership. VW’s share price has fallen 20% in the past six months.

Mr Diess said that the review of executive responsibilities “is an intensive process, and I am grateful that Mr Pötsche has not lost patience”.

“But I think it was a good process,” he added, “and at no point did I lose my motivation. The business is very important to me.

When he was hired at BMW three years ago, Mr Diess (pronounced DEES) was given a two-pronged challenge: to regain the trust of customers who turned their back on VW after the diesel cheating scandal. and transform the company into a powerhouse for electric mobility.

Its recent efforts to shake up Volkswagen have notably highlighted the efficiency gap between Volkswagen and Tesla, the electric car maker which is increasingly seen as VW’s main rival. He pointed out that Tesla, which is building its first large European factory outside Berlin, aims to assemble each car in just 10 hours at its new factory, while some VW factories take almost twice as long.

The focus on the Tesla has grated many Volkswagen employees, already frustrated with their inability to produce as many vehicles as possible due to the shortage of parts.

A handicapping global semiconductor shortage slowed VW’s production lines, causing third-quarter deliveries to drop 24% and profit sharply. Many workers are stranded in temporary leave which were introduced to prevent layoffs during the pandemic, but have been extended by the company.

Perhaps a sign that Mr. Diess got the message that all references to Tesla are bothering people in Wolfsburg, where Volkswagen is headquartered, he called the company at Thursday’s press conference “an American competitor.” a factory in Grünheide– the location of Tesla’s nearly completed new factory – but declined to give the company name, even when asked specifically about it.

Instead, he kept the script on his enthusiasm for the possibility of transforming VW, including plans to start building an existing electric model, the ID.3, at the company’s headquarters from 2024, into awaiting the introduction of the Trinity model, scheduled for 2026., for which a new plant will be built in Wolfsburg.

As part of a five-year plan, the board of directors also approved new investments, including a new research and development center in Wolfsburg, where Volkswagen was founded in the 1930s. In total, the automaker plans to spend 159 billion euros to modernize company sites across Europe to supply and build electric vehicles.

Analysts generally credit Mr Diess with the ambitious plan to take Volkswagen forward beyond the diesel scandal that threatened the company’s future, and said the board was justified in keeping him in the job. CEO, despite the latest wave of uncertainty and employee discontent.

“Everything that was today in terms of major investments is based on the Diess strategy,” said Ferdinand Dudenhöffer, founder of the Center for Automotive Research in Duisburg, Germany. “He kicked off the biggest restructuring in VW history and pulled VW out of the dark dieselgate past.”

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Newsrust - US Top News: Volkswagen's Herbert Diess to remain CEO, with less control
Volkswagen's Herbert Diess to remain CEO, with less control
Newsrust - US Top News
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